Global Artemisinin Manufacturers Consultation
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1 Global Artemisinin Manufacturers Consultation Chengdu Meeting September 5-7, 2016, Chengdu, China
2 The Global Fund Procurement Strategy on the Artemisinin market is currently under development and may be finalized in the forthcoming months. This document presents the Global Fund s current intention which is subject to change. The data and information herein are provided for illustrative purposes and derive from a limited and preliminary analysis of the Global Fund. The present document shall not be considered as the Global Fund s representation or commitment of any kind. 1
3 Outline Welcome Meeting objective The Global Fund Procurement Introduction Preliminary 2016 Global Fund Anti-malaria Procurement Process The purpose of the Request For Information (RFI) Preliminary analysis of RFI Breakout Session objective and Schedule 2
4 Outline Welcome Meeting objective The Global Fund Procurement Introduction Preliminary 2016 Global Fund Anti-malaria Procurement Process The purpose of the Request For Information (RFI) Preliminary analysis of RFI Breakout Session objective and Schedule 3
5 Host Observer Martin Auton Manager, Global Sourcing, Pharmaceuticals Sourcing and Supply Management Department Anne-Sophie Salmon Specialist, Global Sourcing, Pharmaceuticals Sourcing and Supply Management Department Lin(Roger) Li Manager, Strategy, Analytics & Data Management Sourcing and Supply Management Department Cui Hao Division Director 国家食品药品监管总局药化监管司 Department of Drug and Cosmetics Supervision, CFDA He Chunhong Director 中国医药保健品进出口商会对外合作部 Department of International Cooperation, CCCMHPIE Tuline Kontente Adiyaman Legal Officer, Procurement and Institutional Matters Legal and Compliance Department Guan Yunpeng MD MPH Deputy Director 中国医药保健品进出口商会对外合作部 Department of International Cooperation, CCCMHPIE 4
6 Welcome - Global Artemisinin Manufacturers Bionexx Chongqing Kerui Nanhai Pharmaceutical Chongqing Holley Wuling Mountain Hunan Loudi Yalong Hunan Vigor Bio-tech Co.,Ltd Huvepharma Italia s.r.l. CAT KHANH CO., Ltd. Mediplantex / Sinobright Pharmaceutical Guangxi Xiancaotang Pharmaceutical Co.,Ltd PIDI Standard (Holdings) Ltd. Sichuan Tongrentai Pharmaceutical Co., Ltd Xiangxi Aoruike Pharmaceutical Chemical Note: we will also meet other Artemisinin manufacturers who were not able to attend this meeting 5
7 Outline Welcome Meeting objective The Global Fund Procurement Introduction Preliminary 2016 Global Fund Anti-malaria Procurement Process The purpose of the Request For Information (RFI) Preliminary analysis of RFI Breakout Session objective and Schedule 6
8 Meeting Objective Deepen your understanding of the Global Fund and our proposed approach to the procurement of anti-malarial medicines Deepen our understanding on Artemisinin market and manufacturers Receive any recommendations to the Global Fund 7
9 Meeting Agenda Monday 5 th September 2016 Panel meeting Time Title and Objectives Notes INTRODUCTION Welcome & registration GF and 2016 ANTM RFI introduction Coffee break Panel Q&A Lunch Monday afternoon to Wednesday: individual meetings 8
10 Outline Welcome Meeting objective The Global Fund Procurement Introduction Preliminary 2016 Global Fund Anti-malaria Procurement Process The purpose of the Request For Information (RFI) Preliminary analysis of RFI Breakout Session objective and Schedule 9
11 The Global Fund Results at end 2016 Founded in 2002 International Organization based in Switzerland Investing to defeat AIDS, tuberculosis and malaria A partnership between governments, civil society, private sector, and affected communities. Raises and invests US$ 4 billion per year in more than 140 countries 10
12 Where does the money come from? Where does the money go? Donor Countries: United States, France, United Kingdom, Japan, Germany, EU, Canada, Australia, China and others Private Sector and Foundations: (RED), Gates Foundation, Private companies Individuals 11
13 The Spend Profile Between 2014 & 2016 US$14.6 billion was allocated to fight the three diseases Disease Spend Countries HIV $7.8bn 53% 105 Malaria $4.3bn 30% 74 Tuberculosis $2.6bn 17% 98 Key areas of spend: medicines and other health products & program implementation 12
14 Sources and funds spent on malaria control (for programs costs, prevention, diagnosis & treatment) Private UN, bilateral, others Private sector (copayment mechanism) Since 2002 USD 8.3 billion invested since 2002 National public Public sector 659 million mosquito nets 582 million cases of malaria treated International Malaria International financing Illustrative for all types of malaria spend including products (for prevention, diagnosis & treatment) 2016 Global Fund 50% of international financing 13
15 The Global Fund Procurement Channels for Antimalaria medicine The Global Fund Procurement Channels PPM CPM Country Procurement PSA 1 st line buyer National Systems PSA Manufacturers Manufacturers Manufacturers Products Products Products Principal Recipients 14
16 PPM and CPM YTD 2016 Malaria health product budget Units Value million US$ Artemisinin-based combination therapy (ACT) Pooled Procurement Mechanism (PPM) Co-Payment Mechanism (CPM) 88m treatments 102m treatments Malaria Non-ACT Anti-malaria medicines (Non-ACT) Pooled Procurement Mechanism (PPM) A range of products 20 Health Product Long lasting insecticidal nets (LLINs) Pooled Procurement Mechanism (PPM) 108m Nets 249 Malaria Rapid diagnostic test (MRDT) Pooled Procurement Mechanism (PPM) 93 m tests 22 Total:
17 Our approach to sourcing and procurement In determining our approach we deploy a standard methodology which does not end with the tender process UNDERSTAND DESIGN ENGAGE MANAGE Going to the real places, meet the stakeholders and understanding the facts Defining a set of objectives based on findings and designing an approach to deliver them Designing tenders to meet our objectives Implementing framework agreements and working with suppliers to drive continuous improvement 16
18 Outline Welcome Meeting objective The Global Fund Procurement Introduction Preliminary 2016 Global Fund Anti-malaria Procurement Process The purpose of the Request For Information (RFI) Preliminary analysis of RFI Breakout Session objective and Schedule 17
19 Implementation update: current long term framework agreements : PPM & CPM artemether-lumefantrine (AL) artesunate amodiaquine (ASAQ) Performance based: On-time-in-full delivery (OTIF) : average 72% (mid ) [Target 2016: 80%] Actual allocation adjusted according to performance which is assessed on a quarterly basis PHASE I Revised allocation base PHASE II Reallocate pooled volume PHASE III Implemention risk assessment Performance management & Allocation adjustment Price: Stabilized and reduced Changes since 2014 Additional formulators New strengths of artemether-lumefantrine (AL)
20 The 2016 procurement strategy for antimalarial medicines will have broad valuebased objectives aligned to the Global Fund s Market Shaping Strategy Sustainable supply Meeting program needs for all the needed WHO recommended antimalarial medicines Continued reliable supply De-risking KSM and API supply Supporting the introduction of new products and formulations Competitive pricing and Affordability Leveraged volumes Avoiding price volatility Improved demand visibility; better planning & longer term contracts Collaboration to protect reasonable margins Lower price differentials for better formulations for children Draft Improved and sustained delivery performance Reduced lead times On-Time delivery Vendor managed inventory to respond to stock outs Coordinated procurement of niche low volume products Mitigate the effect of force majeure Longer shelf life Quality & regulatory Broader country registrations Mitigate risks Product quality and safety Manufacturing Health, Safety & Environment (HSE)
21 Procurement Strategy Scope Anti-malarial medicines, all needed WHO recommended products 1 High demand ACTs Low demand ACTs Medicines for severe malaria Seasonal prevention Vivax 1
22 Indicative approach and timeline Phase I RFI (Q2, 2016-Q3,2016) Phase II Two stage RFP (Q4, 2016-Q1, 2017) Phase III Evaluation, Reward & Implementation (Q1, 2017) Consultation with partners RFI to formally obtain the essential information across all suppliers including Artemisinin manufacturers Finalize our procurement strategy and supplier consultation May or may not include the Artemisinin manufacturers Stage one: paper based submission to obtain essential commercial and technical information Stage two: may or may not include a face to face workshop to unpack potential added value and mitigate supply risks Tender Evaluation and award decision Finalize framework agreements Implementation, demand and supply optimization Manage performance moving forward. Managing supplier performance moving forward
23 Outline Welcome Meeting objective The Global Fund Procurement Introduction Preliminary 2016 Global Fund Anti-malaria Procurement Process The purpose of the Request For Information (RFI) Preliminary analysis of RFI Breakout Session objective and Schedule 22
24 The purpose of the Request For Information(RFI) Collect formally data on the Artemisinin market as part of the Global Fund s Procurement Strategy development from: manufacturers of Artemisinin-containing finished pharmaceutical products (FPP); active pharmaceutical ingredient (API) manufacturers of Artemisinin derivatives; Artemisinin manufacturers Explore options for reliable, sustainable and responsible supply Understand more about pricing Understand the accreditation status with the view to mitigate the Global Fund potential reputation risk in terms of environment, health and safety 23
25 Outline Welcome Meeting objective The Global Fund Procurement Introduction Preliminary 2016 Global Fund Anti-malaria Procurement Process The purpose of the Request For Information (RFI) Preliminary analysis of RFI Breakout Session objective and Schedule 24
26 All types of manufacturers expressed an interest to engage with the Global Fund on the supply of Artemisinin Preliminary observation: 1. RFI responses show that majority of the manufacturers across 6 the ACT Supply Chain welcome an engagement with Yes Artemisinin manufacturers to secure supply and mitigate the price volatility No Unclear 2. Plenary and face to face meetings will enable us to have a deeper understanding. Artemisinin API FPP Note: 1.Manufacturers who produce both Artemisinin and API are counted as part of the Artemisinin 2.Manufacturers who produce both API and FPP are counted as part of the FPP 25
27 Not many Artemisinin manufacturers have demand visibility beyond 12 months Customers future demand for Artemisinin 30% 50% 20% Global future demand for Artemisinin 60% 40% <6months 6-12 months >2 years 26
28 US$/kg RFI indicates production output and export data indicates price falling RFI indicates Artemisinin production output and capacity are decreasing Artemisinin average export price from China 388 Total Production output Total Production capacity 300 Tons H H 2016 Source: export data 27
29 The Global Fund PPM and CPM has required an average 68 tons per year of Artemisinin over the period 2013 to 2016 Tons Total PPM and CPM Declared minimum Artemisinin quantities to sustain all global Artemisinin manufacturers Tons PPM CPM Note: RFI 1. For illustrative purpose, conversion ratio between Artemisinin and derivative APIs is considered as 1:1(kg). 2. The calculation is based on PO confirmation instead of delivery in country is based on current budget forecast 28
30 Overall observations on the responses to the RFI RFI Responses indicate All types of manufacturers expressed an interest to engage with the Global Fund on the supply of Artemisinin Demand visibility of Artemisinin is short term Artemisinin manufacturers face challenges with margin Total volume declared to sustain the Artemisinin manufacturers is much greater than GF PPM and CPM demand The Global Fund observations Small price differentiation with volume threshold or longer term commitment Continuous availability of Artemisinin supply is uncertain Different regulatory and safety requirements for different technologies/ manufacturers in different locations (e.g. GMP) Extraction process is high risk in terms of health, safety and environment (large volumes of Petroleum ether) Some manufacturers indicate they need very high volumes to be sustained
31 Mitigating health, safety and environment risks We intend to impose additional requirements to mititage any risks associated with health, safety and environment. We intend to use external expertise to conduct any necessary assessment Satisfactory assessment would be required to be eligible 30
32 Indicative approach and timeline Phase I RFI (Q2, 2016-Q3,2016) Phase II Two stage RFP (Q4, 2016-Q1, 2017) Phase III Evaluation, Reward & Implementation (Q1, 2017) Consultation with partners RFI to formally obtain the essential information across all suppliers including artemisinin manufacturers Finalize our procurement strategy and supplier consultation May or may not include the artemisinin manufacturers Stage one: paper based submission to obtain essential commercial and technical information Stage two: may or may not include a face to face workshop to unpack potential added value and mitigate supply risks Tender Evaluation and award decision Finalize framework agreements Implementation, demand and supply optimization Manage supplier performance moving forward. Managing supplier performance moving forward
33 Outline Welcome Meeting objective The Global Fund Procurement Introduction Preliminary 2016 Global Fund Anti-malaria Procurement Process The purpose of the Request For Information (RFI) Preliminary analysis of RFI Breakout Session objective and Schedule 32
34 Breakout sessions: objectives Deepen your understanding of the Global Fund and our proposed approach to the procurement of anti-malarial medicines Deepen our understanding on Artemisinin market and manufacturers Receive any recommendations to the Global Fund Location: Saphir 33
35 THANK YOU
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